AMD hits Intel with antitrust suit

29th Jun 10:41
AMD has filed an antitrust complaint against Intel in U.S. federal district court, accusing the company of unlawfully maintaining a monopoly in the x86 microprocessor market by shunting customers away from AMD.
AMD said in a statement it has pinpointed 38 companies that have been victims of coercion by Intel, including Dell, Sony, Toshiba, Gateway and Hitachi.
The chipmaker argued that Intel paid companies like Dell and Toshiba not to do business with AMD, and paid Sony millions for exclusivity. AMD claims its share of Sony's business went from 23 percent in 2002 to 8 percent in 2003, to zero percent today.
Intel was not immediately available to comment on the suit.
The most popular type of chip architecture for so-called volume servers, x86 microprocessors run the Microsoft Windows, Solaris and Linux families of operating systems.
"Intel's share of this market currently counts for about 80 percent of worldwide sales by unit volume and 90 percent by revenue, giving it entrenched monopoly ownership and super-dominant market power," AMD said in a statement.
AMD has traditionally run No. 2 to top chipmaker Intel. The company has been praised for its superior 64-bit architecture but that won't necessarily help it win back enough market share from Intel to level the playing field.
Redmonk analyst James Governor said that while antitrust regulation tends to be weak around the globe, AMD's allegations could be an interesting instrument to slow down Intel.
"If you're AMD and you're riding along on a bicycle and Intel is riding along on a motorbike and you've got a stick or a crowbar, you might as well try and throw it into the wheels," Governor said. "Certainly AMD is keen to ensure that it is negotiating on a level playing field."
On the flipside, Governor said: "Intel will not appreciate antitrust scrutiny. Any business is going to find that a real drag. Look at the levels of bureaucracy Microsoft has had to put in place in order to comply with some of its sanctions."
"Everywhere in the world, customers deserve freedom of choice and the benefits of innovation -- and these are being stolen away in the microprocessor market," said Hector Ruiz, AMD chairman, president and CEO, in a statement.
"Whether through higher prices from monopoly profits, fewer choices in the marketplace or barriers to innovation -- people from Osaka to Frankfurt to Chicago pay the price in cash every day for Intel's monopoly abuses."
AMD, which filed its 48-page suit in a federal court in Delaware, may have timing on its side. The suit comes in the wake of a recent ruling from the Fair Trade Commission of Japan (JFTC), which found that Intel abused its monopoly power to exclude fair and open competition, violating Section 3 of Japan's Antimonopoly Act.
The findings revealed that Intel deliberately engaged in illegal business practices to stop AMD's increasing market share by imposing limitations on Japanese PC manufacturers. Intel did not contest these charges.
Moreover, the European Commission is pursuing an investigation against Intel for similar possible antitrust violations and is cooperating with the Japanese authorities.
AMD also alleged that Intel forced NEC, Acer, and Fujitsu into partial exclusivity agreements by conditioning rebates, allowances and market development funds (MDF) on customers' agreement to limit or forego AMD purchases.
The chipmaker also said Intel paid NEC several million dollars for caps on NEC's purchases from AMD. Those caps assured Intel at least 90 percent of NEC's business in Japan and imposed a worldwide cap on the amount of AMD business NEC could do.
The full complaint may be viewed here.
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